From: owner-canslim-digest@lists.xmission.com (canslim-digest) To: canslim-digest@lists.xmission.com Subject: canslim-digest V2 #364 Reply-To: canslim Sender: owner-canslim-digest@lists.xmission.com Errors-To: owner-canslim-digest@lists.xmission.com Precedence: bulk X-No-Archive: yes canslim-digest Friday, August 21 1998 Volume 02 : Number 364 In this issue: [CANSLIM] NonCanslim - RUT - Symmetrical Triangle Resolution? Re: [CANSLIM] RUT - Symmetrical Triangle Resolution? [CANSLIM] IBD count for follow through Re: [CANSLIM] IBD count for follow through Re: [CANSLIM] IBD count for follow through Re: [CANSLIM] Overbought and Oversold - Tom [CANSLIM] RUT [CANSLIM] Re.Identifying Mkt.Tops & Bottoms [CANSLIM] Re.Identifying Mkt.Tops & Bottoms Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms [CANSLIM] O'Neil's counting method? Re: [CANSLIM] O'Neil's counting method? Re: [CANSLIM] O'Neil's counting method? Re: [CANSLIM] Futures contract Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms Re: [CANSLIM] O'Neil's counting method? Re: [CANSLIM] O'Neil's counting method? Re: [CANSLIM] RUT ---------------------------------------------------------------------- Date: Thu, 20 Aug 1998 23:15:19 -0400 From: "Frank V. Wolynski" Subject: [CANSLIM] NonCanslim - RUT - Symmetrical Triangle Resolution? The RUT appears to be putting in a symmetrical triangle. However, it appears to have violated the symmetry by closing below the bottom trendline (the intraday low was also lower than the intraday lower trendline). This verifies that the indecision represented in a symmetrical triangle is usually resolved in the direction of the most current trend. This was on lighter volume however. An unusual pattern. To me at least. I remember reading years ago, that the close has to close below the lowest price during the triangle for the downward breakout to be considered validated. Anyone know anything about this? Care to share? Frank Wolynski - - ------------------------------ Date: Thu, 20 Aug 1998 20:37:43 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] RUT - Symmetrical Triangle Resolution? <> From what I've read, the symmetrical triangle is generally unreliable, and that's been the case in my experience. I've also read that trendlines need not be terribly significant. Quite often the pattern becomes a plain old rectangular base (as with cups and handles, the patterns aren't always perfect). The close would have to be below the lowest price during the pattern to constitute a resumption of the downward trend. Otherwise you've got a trading range between the highest high and the lowest low. But it's important to focus on the charts, even though their message may not always be clear. As O'N and others have said, if "events" don't affect the stock or the market, then they're irrelevant noise (e.g., Sunday's expectations vs. Monday's reality). - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 21 Aug 1998 06:20:31 -0400 From: Jeffry White <"postwhit@sover.net"@sover.net> Subject: [CANSLIM] IBD count for follow through Db wrote: > Assuming my volume figures are correct, I don't see a follow-through > day last October until 12 days after the intraday low and 13 days > after the closing low. It isn't until January that one gets a > legitimate follow-through day within the 4 to 7-day window (granted > the January low is only two-tenths of a point lower than the October > low, but low is low, and it does constitute a retest). In any event, > using the intraday low, the increase in volume, and a 1% increase in > price within that window has always worked for me, so unless IBD comes > up with a compelling reason for doing it some other way, I'll just > keep doing it the way I've been doing it. Same here on using the intraday, and thanks for the explanation of Fleckstein's probable use of the closing low. BTW, I agree with your count for October. But Fleckstein was pounding the table on the 12th day follow through day as the end of the post-crash downturn. How 'bout that comment in the Nas summary yesterday? 10th day? Also, I agree there is "more to it" than counting days and I appreciate that my fanaticism with the count before this group might lead to the impression that it is an outright, never fail, blindly followable buy signal. It is not, the signals by themselves fail at times. The question really is how much more is there to it? A fiercely debatable point, and you know what I watch. I remain 100% in cash, at this point, however. I like the sentiment downturn this week. We are now in fertile territory for a sustained move up on the sentiment side. But take note that there is nothing extreme about the sentiment here, just flat and much improved over what we saw in April and mid-July. Leadership? Leadership.... VRTS and USTR are on my list along with the others I posted recently. Jeffry - - ------------------------------ Date: Fri, 21 Aug 1998 09:03:42 EDT From: Subject: Re: [CANSLIM] IBD count for follow through In a message dated 8/21/98 6:23:15 AM Eastern Daylight Time, postwhit@sover.net@sover.net writes: << I like the sentiment downturn this week. We are now in fertile territory for a sustained move up on the sentiment side. But take note that there is nothing extreme about the sentiment here, just flat and much improved over what we saw in April and mid-July. >> http://www.proinvest.com/home/bulls.htm I have posted this website on sentiment readings several times before but with all talk about sentiment and follow through I thought some could use it. The numbers to pay attention to are at the top. Investor's Intelligence is the survey in IBD. AAII tracks individual investors. Consensus and Market Vane are more volatile than the other two surveys but taking all of these surveys together gives a more balanced (and at this time more bullish for the contrarian) sentiment reading then just looking at the IBD numbers. BTW, a great way to see how important sentiment is in timing your buys/sells is to take these numbers, print out charts of the NAZ and S&P and plot these number above the indices each week. This is a very instructive exercise! DCSquires - - ------------------------------ Date: Fri, 21 Aug 1998 10:28:34 -0400 From: "Frank V. Wolynski" Subject: Re: [CANSLIM] IBD count for follow through Nice site, thank you. Been looking for that very thing! Frank Wolynski At 09:03 AM 8/21/98 EDT, you wrote: >In a message dated 8/21/98 6:23:15 AM Eastern Daylight Time, >postwhit@sover.net@sover.net writes: > ><< I like the sentiment downturn this week. We are now in fertile > territory for a sustained move up on the sentiment side. But take note > that there is nothing extreme about the sentiment here, just flat and > much improved over what we saw in April and mid-July. >> > >http://www.proinvest.com/home/bulls.htm > >I have posted this website on sentiment readings several times before but with >all talk about sentiment and follow through I thought some could use it. The >numbers to pay attention to are at the top. Investor's Intelligence is the >survey in IBD. AAII tracks individual investors. Consensus and Market Vane are >more volatile than the other two surveys but taking all of these surveys >together gives a more balanced (and at this time more bullish for the >contrarian) sentiment reading then just looking at the IBD numbers. BTW, a >great way to see how important sentiment is in timing your buys/sells is to >take these numbers, print out charts of the NAZ and S&P and plot these number >above the indices each week. This is a very instructive exercise! > >DCSquires > > > >- > > - - ------------------------------ Date: Thu, 20 Aug 1998 21:45:31 -0400 From: "Tom Worley" Subject: Re: [CANSLIM] Overbought and Oversold - Tom Hi Walter, While I subscribe to the printed version of DG Nasdaq, I get my data from my subscription to DG Online on a daily basis. The overbot/oversold is the "10 day moving average of the net differences between advances and declines". A strong big cap day with lousy breadth in terms of the nr of issues up/down could still result in a positive (index based) trading day but still in negative up/down in terms of issues (breadth). I look at the "Market Indicators" composite charts for both NYSE and Nasdaq every morning at DGO. This shows not only the index chart itself, but also the overbot/sold chart, the 10 day MA of up/down volume, and the 10 day MA of new highs/lows on one screen. Taking this all in together is where I made my comments from. Overbot/sold and up/down vol can give something of a leading (or at least current) indicator, while new highs/lows gives a lagging indicator (which can sometimes show the degree of strength). Recognizing that we have continued to run in record territory in terms of nr of shares sold short, this correction has been beneficial to shorters to cover. Shorts covering on a correction may stabilize the price drop, but is ultimately bearish as this means the shorts who covered (whether for a gain or a lessened loss) are now in cash and ready to short again on any rally. Shorters being painfully forced to cover (or average up) on a rally trend is far more bullish. I have seen signs/flavor of both relief rally and short covering in the past week or so. Neither are particularly bullish signals to me. And I'm just cynical enough to believe that today's attack on two terrorist base camps in the mid east was not coincidental, since otherwise the big news story tonight would have been Monica's second day testifying to the grand jury, and whether or not Slick Willy's crafted presentation on Monday was accurate (supposedly she's real ticked off that he made it sound like he was stoic and "took it like a man" while she did all the work!). Now, we get to hear about the mili tary action while Teflon Bill is forced to interrupt his much needed vacation (for his family to heal, poor boy) and return to Washington to act presidential. Why didn't we attack yesterday, or tomorrow?? Is this another selective tie wearing occasion?? About a week ago, the overbot/sold on both NYSE and NASDAQ were each about a minus 1000 (the chart goes off the scale at 600+ so that gives you an idea just how severe this was). As of Wed's trading, NYSE was at minus 60 and Nasdaq at minus 230. Index prices, despite this still remaining a big cap mkt, did not show a similar recovery. This suggests to me the short covering/relief rally scenario, which does not suggest strength for a further rally, if anything it suggests weakness and the beginning of a new correction or, at best, a lengthy consolidation (which might be the healtiest event of all). The earnings warning from NSM, and the downgrade of INTC, also signals a warning to the value shoppers looking at the chip mfrs as an opportunity. Both of these sectors have been suggested here as a possible opportunity, but I just don't see it yet. At best, they may tie up capital with little return for a considerable time period. Tom W - -----Original Message----- From: Walter Stock To: canslim@lists.xmission.com Date: Thursday, August 20, 1998 8:55 AM Subject: Re: [CANSLIM] Overbought and Oversold - Tom > However, I remain concerned over > just how quickly the excessively oversold conditions on both NYSE and > NASDAQ were reversed without an equal recovery in price. As of > yesterday, NYSE had already nearly attained a neutral level on > oversold vs overbot, yet was a very long way below its recent highs. > Nasdaq wasn't much better. Hi Tom, Am on the four week trial of the printed Daily Graphs. Page 9 of both editions show "Short Term - Overbought Oversold" indicators with huge spikes downwards in August. For the NYSE edition it is the biggest drop on the page going back over three years. The Nasdaq is almost as dramatic. I have not been able to find any information in Daily Graphs (or in IBD's book "Guide to the Markets") as to how this oscillator is built and how to interpret it. Is this the data that you are referring to in your analysis above ? How is the graph constructed ? As you say, the oscillator is returning to neutral without corresponding improvement in prices... would this hint that the market is indeed more likely to trade around current levels and that this week's upward momentum is depleted ? How important is this indicator to you relative to the other indicators? Very happy to see you posting more often. Any help you could provide would be much appreciated. Walter Stock Oakville, ONT - Canada - - - - ------------------------------ Date: Fri, 21 Aug 1998 09:10:07 -0700 (PDT) From: dbphoenix Subject: [CANSLIM] RUT Well there goes your triangle, Frank. But the RUT's now sitting on that two-year trendline. It'll be interesting to see if it's worth anything. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 21 Aug 1998 13:09:39 EDT From: Subject: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms Canslim Digest People: I thought this article in IBD would be of interest and of use (esp. to those who don't subscribe yet to Investors Business Daily). The entire article is from 8/21/98's IBD, and is written by WON. jans When trying to decide the future direction of the general market averages, most individual investors rely on their personal feelings or opinions, which are usually wrong because they're largely based on their hopes, fears or faulty input. Most professional investors, market technicians, gurus and advisers track and try to interpret 20 or 30 market indicators. They look at everything from market price- earnings ratios, market dividends, interest rates and economic projections, to charts of new highs and lows, overbought/oversold oscillators, advance/decline lines, sentiment indicators, moving averages and a whole concoction of similar devices. I N V E S T O R ' S C O R N E R None of these works very well. They're too complicated, subject to incorrect interpretation or the ever-so-many indicators are weighted improperly. And yes, even the pros have personal opinions, beliefs, hopes and fears. The result? They're right half the time and wrong half the time on general market questions. That, along with real size problems (huge assets under management), is why most institutional investors follow a policy of staying fairly fully invested. That's OK for mutual funds because they have wide diversification, professional management and are truly long-term investments that will rebound with each eventual market recovery. However, investors in eight or 10 individual stocks assume a much greater risk if they have no rules to tell them when to sell a stock and take a profit, or when a key change in the general market's direction starts to occur. Sometimes the answers to complicated things in life can actually be very simple. My discovery on determining the market's direction is so simple, it's alarming. If you want to determine what the market averages are going to do, you can throw away most of the dozens of secondary indicators that are supposed to tell you what the market ought to do and concentrate solely on the object itself: Study the daily market averages' (Dow Jones industrials, S&P 500 and the Nasdaq composite) price and volume changes. Learn to read daily exactly what these indexes are actually doing. You don't need to predict, you just need to understand accurately what is happening as it's happening. Then, you'll never be caught off guard and you'll probably know more than 98% of other investors. Here's how to decipher when the market is getting ready to top. It always happens on the way up. You'll observe on three, four or five days over a period of a few weeks that volume will increase from the day before, and the index's price will either clearly close down from the prior day or stall and make very little progress. These are days of distribution (professional selling or liquidation) in the general market. After four or five days of this churning on increased volume with poor price progress, the market will turn down. This is the time to sell a stock or two and/or get off of margin (using borrowed money). Why is it important to track in IBD what the market itself is actually doing daily? When the market averages go into a decline or correction, three out of four of your stocks will go down along with the averages. Many, especially smaller capitalization, lower-quality stocks, will drop a greater percentage than the averages - and a few may not come back. You can lose money. DISTRIBUTION DAYS ~~~~~~~~~~~~~~~~~~~~~~~~~~ Take a look at the accompanying chart plotting the Dow's recent performance. It can always be found on IBD's Markets Charts page (A27). I've numbered the precise days where distribution occurred. On April 22, at point 1 on the price index chart, the Dow stalled and closed down slightly (the day's close is indicated by the horizontal slash mark) and the NYSE volume at the bottom of the chart increased from the day before. Three days later at point 2, the Dow dropped, closed badly and the volume increased. At point 3, six days later, the Dow closed down and volume was up. The very next day, point 4, the sell-off worsened on increased volume vs. the prior day's volume. The decline is now under way and you should not buy on the first or second day of any attempted rallies. Why? Because the market's trend is down. You can only safely buy once an attempted rally shows a powerful follow- through day up over 1% on the index and on increased volume. Follow throughs normally occur between the fourth and seventh day of an attempted rally. (Next Friday, I'll tell you more about how to recognize rallies that are usually safer for beginning new purchases.) LAST MONTH'S TOP ~~~~~~~~~~~~~~~~~~~~~~~~~ Most recently, point 1 in early July revealed stalling on increased volume. Two days later, at point 2, the Dow dropped on larger volume. Four days later at point 3, the market closed off slightly with volume up. At points 4 and 5, the Dow broke on increased volume. Points A, B and C show each rally attempt stalling or beginning to fail. Finally, on Tuesday, the Dow showed a follow-through buy day, as did the Nasdaq, which followed through on its 10th day of recovery. These buy indications don't appear powerful since one occurred on the 10th day and both follow throughs were partially based on news - President Clinton's apology and Russia's devaluation. It's probably wise to limit any buying to only the highest- quality large-cap institutional growth stocks that trade at least 2 million shares a day. I always check the three market averages daily in IBD, even if I'm out of the market. It will always tell me exactly when the next bull market begins and to resume buying stocks. I do not recall this technique of carefully checking out the market averages ever failing to pinpoint very early the beginning of each new major market uptrend. Next week, I'll show you in detail how you can spot the very beginning of the next bull market - the simple, easy and realistic way. This is something no one can afford to miss, because you could find the next Microsoft or Cisco Systems if you know exactly what to watch for. See you next week. - - ------------------------------ Date: Fri, 21 Aug 1998 11:17:13 -0700 (PDT) From: dbphoenix Subject: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms <> Does this mean that Mr./Ms. Fleckstein is no longer with us? :) - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 21 Aug 1998 20:34:06 +0200 From: Johan Van Houtven Subject: Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms ><entire >article is from 8/21/98's IBD, and is written by WON.>> > >Does this mean that Mr./Ms. Fleckstein is no longer with us? :) I heard she has accepted a position at CNBC's Squawk Box. My source told me she has all the necessary qualities to become a 'celeb' on this program. Johan Van Houtven / CLICK! N.V. - - ------------------------------ Date: Fri, 21 Aug 98 15:28:14 PDT From: "Walter Stock" Subject: Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms Thank you Jans for reprinting the article. This article is NOT part of O'Neil's 26 week series. That comes out on Saturday. This article is MUST reading for newbies, and anyone interested in the debate on counting for follow-through days. Two eye-openers (among others)... 1) O'Neil only uses the index CLOSE data for calling tops and bottoms. 2) If you have to buy at all he recommends buying only large-cap growth stocks in this market. The print article in the newspaper version also has a DJIA chart to which WON refers in his writing. I would recommend purchasing the newspaper to get it. ( I checked Investors.com and neither the article nor the chart are incl= uded.) WON will write another Investor's Corner column next Friday. Walter Stock Oakville, ONT - Canada - ---------- > Canslim Digest People: > > I thought this article in IBD would be of interest and of use (esp= . to > those who don't subscribe yet to Investors Business Daily). The entire = article > is from 8/21/98's IBD, and is written by WON. > > jans > > When trying to decide the future direction of the general market = averages, > most individual investors rely on their personal feelings or opinions, = which > are usually wrong because they're largely based on their hopes, fears = or > faulty input. > Most professional investors, market technicians, gurus and adviser= s track > and try to interpret 20 or 30 market indicators. They look at everythin= g from > market price- earnings ratios, market dividends, interest rates and eco= nomic > projections, to charts of new highs and lows, overbought/oversold oscil= lators, > advance/decline lines, sentiment indicators, moving averages and a whol= e > concoction of similar devices. > I N V E S T O R ' S C O R N E R > > None of these works very well. They're too complicated, subject = to > incorrect interpretation or the ever-so-many indicators are weighted > improperly. And yes, even the pros have personal opinions, beliefs, hop= es and > fears. The result? They're right half the time and wrong half the time = on > general market questions. > That, along with real size problems (huge assets under management)= , is > why most institutional investors follow a policy of staying fairly full= y > invested. That's OK for mutual funds because they have wide diversifica= tion, > professional management and are truly long-term investments that will = rebound > with each eventual market recovery. > However, investors in eight or 10 individual stocks assume a much = greater > risk if they have no rules to tell them when to sell a stock and take = a > profit, or when a key change in the general market's direction starts = to > occur. > Sometimes the answers to complicated things in life can actually = be very > simple. My discovery on determining the market's direction is so simple= , it's > alarming. If you want to determine what the market averages are going = to do, > you can throw away most of the dozens of secondary indicators that are > supposed to tell you what the market ought to do and concentrate solely= on the > object itself: Study the daily market averages' (Dow Jones industrials,= S&P > 500 and the Nasdaq composite) price and volume changes. > Learn to read daily exactly what these indexes are actually doing.= You > don't need to predict, you just need to understand accurately what is > happening as it's happening. Then, you'll never be caught off guard and= you'll > probably know more than 98% of other investors. > Here's how to decipher when the market is getting ready to top. = It always > happens on the way up. You'll observe on three, four or five days over = a > period of a few weeks that volume will increase from the day before, = and the > index's price will either clearly close down from the prior day or stal= l and > make very little progress. > These are days of distribution (professional selling or liquidatio= n) in > the general market. After four or five days of this churning on increas= ed > volume with poor price progress, the market will turn down. This is the= time > to sell a stock or two and/or get off of margin (using borrowed money). > Why is it important to track in IBD what the market itself is actu= ally > doing daily? When the market averages go into a decline or correction, = three > out of four of your stocks will go down along with the averages. Many, > especially smaller capitalization, lower-quality stocks, will drop a = greater > percentage than the averages - and a few may not come back. You can los= e > money. > > DISTRIBUTION DAYS > ~~~~~~~~~~~~~~~~~~~~~~~~~~ > Take a look at the accompanying chart plotting the Dow's recent perform= ance. > It can always be found on IBD's Markets Charts page (A27). I've numbere= d the > precise days where distribution occurred. > On April 22, at point 1 on the price index chart, the Dow stalled = and > closed down slightly (the day's close is indicated by the horizontal = slash > mark) and the NYSE volume at the bottom of the chart increased from the= day > before. Three days later at point 2, the Dow dropped, closed badly and = the > volume increased. At point 3, six days later, the Dow closed down and = volume > was up. The very next day, point 4, the sell-off worsened on increased = volume > vs. the prior day's volume. > The decline is now under way and you should not buy on the first = or > second day of any attempted rallies. Why? Because the market's trend = is down. > You can only safely buy once an attempted rally shows a powerful follow= - - > through day up over 1% on the index and on increased volume. Follow thr= oughs > normally occur between the fourth and seventh day of an attempted rally= . > (Next Friday, I'll tell you more about how to recognize rallies = that are > usually safer for beginning new purchases.) > > LAST MONTH'S TOP > ~~~~~~~~~~~~~~~~~~~~~~~~~ > Most recently, point 1 in early July revealed stalling on increased vol= ume. > Two days later, at point 2, the Dow dropped on larger volume. Four days= later > at point 3, the market closed off slightly with volume up. At points = 4 and 5, > the Dow broke on increased volume. Points A, B and C show each rally = attempt > stalling or beginning to fail. > Finally, on Tuesday, the Dow showed a follow-through buy day, as = did the > Nasdaq, which followed through on its 10th day of recovery. These buy > indications don't appear powerful since one occurred on the 10th day = and both > follow throughs were partially based on news - President Clinton's apol= ogy and > Russia's devaluation. > It's probably wise to limit any buying to only the highest- qualit= y > large-cap institutional growth stocks that trade at least 2 million sha= res a > day. > I always check the three market averages daily in IBD, even if I'm= out of > the market. It will always tell me exactly when the next bull market = begins > and to resume buying stocks. I do not recall this technique of carefull= y > checking out the market averages ever failing to pinpoint very early = the > beginning of each new major market uptrend. > Next week, I'll show you in detail how you can spot the very begin= ning of > the next bull market - the simple, easy and realistic way. This is some= thing > no one can afford to miss, because you could find the next Microsoft = or Cisco > Systems if you know exactly what to watch for. > See you next week. > > > > > - > > - - ------------------------------ Date: Fri, 21 Aug 1998 11:13:06 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms <> Does this mean that Mr./Ms. Fleckstein is no longer with us? :) - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 21 Aug 1998 23:00:59 +0200 From: Johan Van Houtven Subject: [CANSLIM] O'Neil's counting method? >Two eye-openers (among others)... > >1) O'Neil only uses the index CLOSE data for calling tops and bottoms. >2) If you have to buy at all he recommends buying only large-cap >growth stocks in this market. Two questions: 1) Why does he use the DJIA index with NYSE volume figures? Why not use the DJIA with DJIA volume and NYSE with NYSE volume? 2) The NASDAQ's count is still OK. Today we did not break 1750 the low of the count and we closed higher than 1788, the close of day 1 of the count. If you look at the NYSE chart we did not have a follow-through day yet. NYSE made a new intra-day low today, but closed higher than the previous low. So today is day one for the NYSE IMO. If O'Neil uses ONLY closing prices, the start of the count for the DJIA was the most recent lowest close on Fri 08/14. If that is day 1, the the follow-through day for the DJIA was on day 3, Tuesday 08/18. BUT this is a valid follow-through day ONLY if you use NYSE volume, because DJIA volume on Tuesday 08/18 was lower that the day before. If he starts counting from an intraday low, day 1 for the DJIA is 08/11. The follow-through day is day 6, Tuesday 08/18. BUT again: this is a valid follow-through day ONLY if you use NYSE volume, because DJIA volume on Tuesday 08/18 was lower that the day before. For the DJIA, as far as I'm concerned, we have not had a valid follow-through day per my counting method. B^) So let us look at the NYSE Composite Index now and use the corresponding NYSE Composite Index volume. IF you start counting from an intraday low, today is day 1 as we made a new low today (Fri 08/21). IF you start counting from an intraday low, but only use closing prices after that, we had a valid follow-through day on Tues 08/18 and the count started on 08/11. Is this the way O'Neil counts?? Wierd if you ask me. IF you start counting from a new closing low, Fri 08/14 is day 1.The valid follow-through day is on day 3 of the count: Tues 08/18. The volume was indeed higher than the previous day. I also wonder is you should call the intraday low day day 1. I would call that day zero. O'Neil says you should ignore the first 2 days of a attempted ralley. Where does he start his count? If day 1 of the attempted ralley is the day after the day with the new intraday low, you can forget the counts where day 3 is a follow-through day in the descriptions above, as it is in fact day 2 of the attempted ralley. I could go on, but my point is this: I'm very glad I discovered Mr. Ian Woodward's rules for recognizing a probable new upleg or top. Jeffry, did I misinterpret O'Neil? Can you or anyone else explain the counting method in a CLEAR and methological way, please? Not that it is THAT important, but I would really like to understand O'Neil's counting method precisely. Johan Van Houtven / CLICK! N.V. - - ------------------------------ Date: Fri, 21 Aug 1998 17:08:10 -0400 (EDT) From: Deepak Kapur Subject: Re: [CANSLIM] O'Neil's counting method? What do we make of today's reversal? The SPY as well as SP500 touched the low of 105.5 and 1055 areas again, and bounced. Low for OEX was 520.43; for NASDAQ: 1768, and RUT 390. Is it the climactic reversal we were looking for? Is the correction over? I missed the sentiment nos. for this week. I guess I will have to wait for Barrons tomorrow. What are the chances we are going to test the lows again? A question, is there any site where I can find the daily graph of S&P future contract? Thanks, Deepak - - ------------------------------ Date: Fri, 21 Aug 1998 17:13:15 -0400 (EDT) From: Deepak Kapur Subject: Re: [CANSLIM] O'Neil's counting method? Johan, >I could go on, but my point is this: I'm very glad I discovered Mr. Ian >Woodward's rules for recognizing a probable new upleg or top. Can you explain Woodward's rules using the examples of indices that you used while trying to understand WON's method? Thanks, Deepak - - ------------------------------ Date: Fri, 21 Aug 1998 17:28:35 EDT From: Subject: Re: [CANSLIM] Futures contract In a message dated 8/21/98 5:10:05 PM Eastern Daylight Time, kapur@cs.albany.edu writes: << A question, is there any site where I can find the daily graph of S&P future contract? >> This is a link to the September contract, symbol SPU8 http://quotewatch.com/search/index.cgi?searchbox=1&searchfor=spu8 DCSquires - - ------------------------------ Date: Fri, 21 Aug 1998 15:17:22 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] Re.Identifying Mkt.Tops & Bottoms <> Either that or he's using lows for calling bottoms and counting the lowest low day as the first rally day (unless, of course, we were to close at the low). If, for example, we had reached a new low today, I'd definitely call it a rally to come back more than 200 points. But then I've been using the low all these years, so what do I know? I'm just glad I learned how to read charts and don't have to rely on counting days. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 21 Aug 98 18:51:44 PDT From: "Walter Stock" Subject: Re: [CANSLIM] O'Neil's counting method? Hi Johan, Couple quick comments... IBD always graphs the DJIA index above the NYSE volume (same for S&P 500). I don't know the reasoning. O'Neil definitely uses CLOSE data. He mentions it in the text. He also has a demonstration graph of his technique in the newspaper with buy and sell points drawn in, and this graph does not work if you use LOW instead of close data (check the #2 point in his graph in mid-April ). I know that many technicians favor close data over intraday high or low. (And many others don't.) Hope this helps, Walter Stock Oakville, ONT - Canada > >Two eye-openers (among others)... > > > >1) O'Neil only uses the index CLOSE data for calling tops and bottoms. > >2) If you have to buy at all he recommends buying only large-cap > >growth stocks in this market. > > Two questions: > > 1) Why does he use the DJIA index with NYSE volume figures? > Why not use the DJIA with DJIA volume and NYSE with NYSE volume? > > 2) The NASDAQ's count is still OK. Today we did not break 1750 the low > of the count and we closed higher than 1788, the close of day 1 of the = count. > If you look at the NYSE chart we did not have a follow-through day yet. > NYSE made a new intra-day low today, but closed higher than the previou= s > low. So today is day one for the NYSE IMO. > > > If O'Neil uses ONLY closing prices, the start of the count for the DJIA= was > the most recent lowest close on Fri 08/14. If that is day 1, the the > follow-through day for the DJIA was on day 3, Tuesday 08/18. BUT this = is a > valid follow-through day ONLY if you use NYSE volume, because DJIA volu= me > on Tuesday 08/18 was lower that the day before. > > If he starts counting from an intraday low, day 1 for the DJIA is 08/11= . > The follow-through day is day 6, Tuesday 08/18. BUT again: this is a = valid > follow-through day ONLY if you use NYSE volume, because DJIA volume on > Tuesday 08/18 was lower that the day before. > > For the DJIA, as far as I'm concerned, we have not had a valid > follow-through day per my counting method. B^) > > So let us look at the NYSE Composite Index now and use the correspondin= g > NYSE Composite Index volume. > > IF you start counting from an intraday low, today is day 1 as we made = a new > low today (Fri 08/21). > > IF you start counting from an intraday low, but only use closing prices > after that, we had a valid follow-through day on Tues 08/18 and the cou= nt > started on 08/11. Is this the way O'Neil counts?? Wierd if you ask me. > > IF you start counting from a new closing low, Fri 08/14 is day 1.The = valid > follow-through day is on day 3 of the count: Tues 08/18. The volume was > indeed higher than the previous day. > > I also wonder is you should call the intraday low day day 1. I would = call > that day zero. O'Neil says you should ignore the first 2 days of a > attempted ralley. Where does he start his count? If day 1 of the attemp= ted > ralley is the day after the day with the new intraday low, you can forg= et > the counts where day 3 is a follow-through day in the descriptions abov= e, > as it is in fact day 2 of the attempted ralley. > > I could go on, but my point is this: I'm very glad I discovered Mr. Ian > Woodward's rules for recognizing a probable new upleg or top. > > Jeffry, did I misinterpret O'Neil? Can you or anyone else explain the > counting method in a CLEAR and methological way, please? Not that it = is > THAT important, but I would really like to understand O'Neil's counting > method precisely. > > > > Johan Van Houtven / CLICK! N.V. > > > > > - > > - - ------------------------------ Date: Fri, 21 Aug 1998 17:28:12 -0700 (PDT) From: dbphoenix Subject: Re: [CANSLIM] O'Neil's counting method? <> However, he specifically uses the term only in relation to tops. His brief mention of buypoints doesn't clearly state what he uses. The best one can do is infer that he uses the close. Though we could spend all weekend on this, perhaps it would be better to just wait till next Friday when he discusses market bottoms. - --Db _________________________________________________________ DO YOU YAHOO!? Get your free @yahoo.com address at http://mail.yahoo.com - - ------------------------------ Date: Fri, 21 Aug 1998 22:36:26 -0400 From: "Frank V. Wolynski" Subject: Re: [CANSLIM] RUT At 09:10 8/21/98 -0700, you wrote: > > >Well there goes your triangle, Frank. But the RUT's now sitting on >that two-year trendline. It'll be interesting to see if it's worth >anything. > >--Db > Just had to pull out my 'Tech Analysis Explained' 2nd edition, Martin Pring. He too states the uncertainty of symetrical triangles, in fact he states they are especially difficult because no clue is given in the triangle. He does state however that moves that begin during the last 2/3 to 3/4 are more successful in the breakout direction than those that begin the move upon completion of the triangle. He states the later are prone to failure. If I remember correctly, Elder also made this observation. Transposing to current markets, this would imply further action to the downside. This would also fit in the current (down)trend channel. I stare at the Dow Transports, basically in a crash dive, and can't find the courage to be even the least bit bullish. I can't think of a single senario in which the Transports could stage a rally, other than a 'relief', 'short covering', temporary bounce. Perhaps if all terrorists turned themselves into authorities. Yeah, right! Again todays volume did not signal capitulation in my reading of it. The good news? New lows did not reach the levels reached on 8/5 and 8/6. Sentiment is now more bearish. That's a divergence in my book. Not enough to warrant positions, but a good development none the less. Frank Wolynski ( Sorry I can't help with the counting problem. The reason is simple. I use the Polish numbering system: 1,2,3, Infinity. B-} ) - - ------------------------------ End of canslim-digest V2 #364 ***************************** To unsubscribe to canslim-digest, send an email to "majordomo@xmission.com" with "unsubscribe canslim-digest" in the body of the message. For information on digests or retrieving files and old messages send "help" to the same address. Do not use quotes in your message.